Inventory models help businesses determine optimal order quantities to minimize total costs. There is uncertainty in demand that can cause problems with orders and stock levels. Two common inventory systems are: 1) fixed order quantity (Q), where the order amount is fixed but the time between orders varies, and 2) fixed order periodic (P), where the time between orders is fixed but the order amount varies. A periodic review system helps manage inventory by reviewing levels at set intervals and ordering to replenish back to target levels.

1. Inventory models helps to
find out the order quantity
which minimizes the total cost

5. Demanduncertaintyoccursduringtimeswhena
businessoranindustryisunabletoaccurately
predictconsumerdemandforitsproductsor
services.
Thiscancauseanumberofproblemsforthe
business,especiallyinmanagingordersand
stockinglevels

7. 1. The fixed order quantity system
(Q)
2. The fixed order periodic system (P)

11. Forward buying
Forwardbuying is a process relatedto retail
inventories,financial instruments, assets etc.
wherein they are purchased in quantity excess to
demand to counterfuture pricerise.
This is practiced by retailer when they find
manufacturers selling the product at a
discounted priceand purchasethe items bulk.

12. A periodic review system is a typical system that helps
in the management of a company’s inventory,
independently. After a definite period, the inventory is
counted, and then, the difference in the inventory and
target inventory is computed.
New stock of inventory is then ordered so as to bring
the inventory to the targeted level of inventory which is
to be maintained by the company. It is sometimes also
known as fixed time period system of inventory.

14. According to the Q-system of inventory control,
the order quantity of the items is fixed and the
interval period of ordering depends on the level
of reordering of the items.
However, the reordering in the P-system is fixed
and the quantity of ordering items varies in
different review cycles.